Washington Post 2014 Annual Report Download - page 104

Financial Statements are based on this organizational structure and
information reviewed by the Company’s management to evaluate
the business segment results. The Company has six reportable
segments: KHE, KTP, Kaplan International, cable, television
broadcasting and other businesses.
The Company evaluates segment performance based on operating
income before amortization of intangible assets and impairment of
goodwill and other long-lived assets. The accounting policies at the
segments are the same as described in Note 2. In computing
income from operations by segment, the effects of equity in earnings
(losses) of affiliates, interest income, interest expense, other non-
operating income and expense items and income taxes are not
included. Intersegment sales are not material.
Identifiable assets by segment are those assets used in the
Company’s operations in each business segment. The Prepaid
Pension cost is not included in identifiable assets by segment.
Investments in marketable equity securities are discussed in Note 4.
Education. Education products and services are provided by
Kaplan, Inc. KHE includes Kaplan’s postsecondary education
businesses, made up of fixed-facility colleges, as well as online
postsecondary and career programs. KHE also includes the
domestic professional training businesses. KTP includes Kaplan’s
standardized test preparation programs. Kaplan International
includes professional training and postsecondary education
businesses outside the United States, as well as English-language
programs.
In the third quarter of 2014, Kaplan completed the sale of three of
its schools in China that were previously included as part of Kaplan
International. An additional school in China was sold in January
2015. Kaplan sold Kidum in August 2012, EduNeering in April
2012 and KLT in February 2012; therefore, the education division’s
operating results exclude these businesses.
In recent years, Kaplan has formulated and implemented
restructuring plans at its various businesses that have resulted in
significant costs in the past three years, with the objective of
establishing lower cost levels in future periods. Across all Kaplan
businesses, restructuring costs of $16.8 million, $36.4 million and
$45.2 million were recorded in 2014, 2013 and 2012,
respectively, as follows:
Year Ended December 31
(in thousands) 2014 2013 2012
Accelerated depreciation .... $ 2,062 $16,856 $17,230
Lease obligation losses ...... 1,750 9,351 9,794
Severance ............... 5,075 6,289 14,349
Accelerated amortization of
intangible assets ......... —— 2,595
Software asset write-offs ..... 7,689 ——
Other ................... 230 3,862 1,274
$16,806 $ 36,358 $ 45,242
KHE incurred restructuring costs of $6.5 million, $19.5 million and
$23.4 million in 2014, 2013 and 2012, respectively, primarily
from accelerated depreciation and severance and lease
obligations. These costs were incurred in connection with a plan
announced in September 2012 for KHE to close or consolidate
operations at 13 ground campuses, additional plans announced in
2014 to close five more campuses, along with plans to consolidate
facilities and reduce its workforce.
In February 2015, Kaplan entered a Purchase and Sale Agreement
with ECA to sell substantially all of the assets of its KHE Campuses
business. The transaction is contingent upon certain regulatory and
accrediting agency approvals and is expected to close in the
second or third quarter of 2015. In addition, in the fourth quarter of
2014, Kaplan recorded a $13.6 million other long-lived asset
impairment charge in connection with its KHE Campuses business.
Kaplan International incurred restructuring costs of $0.2 million,
$5.8 million and $16.4 million in 2014, 2013 and 2012,
respectively. These restructuring costs were largely in Australia and
included lease obligations, accelerated depreciation and severance
charges.
Total accrued restructuring costs at Kaplan were $12.7 million and
$17.6 million at the end of each of 2014 and 2013, respectively.
In the second quarter of 2012, Kaplan International results
benefited from a favorable $3.9 million out-of-period expense
adjustment related to certain items in 2011 and 2010. With
respect to this out-of-period expense adjustment, the Company has
concluded that it was not material to the Company’s financial
position or results of operations for 2014, 2013 and 2012 and the
related interim periods, based on its consideration of quantitative
and qualitative factors.
Cable. Cable operations consist of cable systems offering video,
data, voice and other services to subscribers in midwestern, western
and southern states. The principal source of revenue is monthly
subscription fees charged for services.
In November 2014, the Company announced a plan for the
complete legal and structural separation of Cable ONE, Inc. from
the Company (See Note 1).
Television Broadcasting. Television broadcasting operations are
conducted through five VHF television stations serving the Detroit,
Houston, San Antonio, Orlando and Jacksonville television markets.
All stations are network-affiliated (except for WJXT in Jacksonville),
with revenues derived primarily from sales of advertising time.
In June 2014, the Company completed the sale of WPLG, a
television station serving the Miami market. WPLG results are
included in discontinued operations, net of tax, for all periods
presented. The television broadcasting segment operating results
have been reclassified to reflect this change.
Other Businesses. Other businesses includes the operating results of
The Slate Group and Foreign Policy Group, which publish online
and print magazines and websites; SocialCode, a marketing
solutions provider helping companies with marketing on social-
media platforms; Celtic, a provider of home health and hospice
services; Forney, a global supplier of products and systems that
control and monitor combustion processes in electric utility and
industrial applications, acquired by the Company in August 2013;
and Trove, a digital innovation team that builds products and
technologies in the news space. In April 2014, Celtic acquired the
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